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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

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FOOD PROCESSING IN BANGLADESH

Opportunities within fishery, vegetables and fruits


UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

AGENDA

The food sector overall

The fishing industry

The fruit and vegetable


industry

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

SUMMARY I: THE FOOD PROSECCING


SECTOR IS IMPORTANT IN BANGLADESH
Bangladesh has a well-established food
processing sector, which heavily relies
on agricultural production

The sector accounts for 22% of total


manufactured products, 20% of total
labor force and 5% of total GDP equal
to around 4.48 bill USD

Focus is on domestic demand.


Excluding scrimps export of processed
food products is limited and mainly
targeted ethnic products, not the
mainstream international markets

Besides scrimps main products are


agriculturally based as oils and
bakeries, but also fishery plays an
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important role
UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

SUMMARY II: A NUMBER OF OPPORTUNITIES


EXISTS WITHIN PROCESSED FOODS
Main challenge in the fishing industry is lack of raw
materials, due to high national and international demand.
This gives opportunities:

Investments in hatcheries and ponds etc. (grow supply


base, develop contract farming etc.)

Technology introduction to increase effectiveness in


trawl fishing and inland fishing

Technology introduction to increase utilization of fish


waste

Main business opportunities in the fruit and vegetable


industries are:

TBD (study not done until end of 2009)

xxxx

xxxx

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

EDIBLE OILS FOLLOWED BY FISHERIES ARE THE


MAJOR SUBSECTORS WITHIN PROCESSED FOODS

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

THE PRODUCTION OF PROCESSED FOOD


HAS SHOWN SIGNIFICANT GROWTH

There are nearly 700 processed


food manufacturing enterprises
in Bangladesh including brands
like Teer, Olympia, Milk Vita,
Fresh, 7Up, Bombay, Ahmed,
Bengal, Pran, Isphahani and
Igloo

The processed food sector has


grown 22% during the last 3
years and the growth is
expected to continue as the
industry is considered the most
potential growth industry in
Bangladesh

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

MAIN EKSPORTS ARE SCRIMPS FOLLOWED


BY FISH AND AGROBASED PRODUCTS
Bangladesh only has around
0.1% of the world share in
export of processed foods

In FY07-08 exports amounted to


515.48 mill USD

81% were shrimp products, 15%


fish products and only 4% agro
based products

The export products of agro


goods are mainly aromatic rice,
powdered spices, frozen snacks,
puffed rice, mustard oil

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

EKSPORT LEVELS ARE NOT HIGH, BUT


GROWTH HAS BEEN SUBSTANTIAL

Eksports grew 23% from 2005-2006 to 2007-2008 in terms of MT and about


12% in terms of USD-value

As processed shrimp production has stagnated the growth is fully contributed


to growth in processed fish products (36% measured in MT) and processed
agro-products (87% also measured in MT)

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

AND THE POTENTIAL TO GROW EVEN


FURTHER IS VERY SIZEABLE

The potentials for high volume export


in the processed food sector have not
been exploited to the fullest

Focus has mainly been on ethnical


products and export to a limited
numbers of countries. There is
limited export to the EU, Italy and
the UK are major importers

With only smaller changes in product


range and standards it is believed
that there is high potential for
entering the US and EU mainstream
markets with processed food
products
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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

THE EXPECTATION OF CONTINOUS


GROWTH FINDS STRONG SUPORT
Investment climate in Bangladesh is very
attractive. One main goal of government is
to attract foreign investors and boost export

12.5% cash incentives to export of frozen


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shrimp and fish and 20% cash incentives to
export of agro processed products is given

The sector has further been declared as a


Thrust Sector and therefore receives
preferential treatments including income tax
exemption, tax return, cheaper air
transport, low interest rates and export
assistance
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Bangladesh is also part of EUs GSP and EBA
programmes, which opens for duty and
quota free access to the EU market
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1. Government subsidy given on export price to the exporter. 2 Generalized System of Preference. 3. Everything But Arms.
UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

OTHER FACTORS ARE ALSO SUPPORTING A


BELIEF IN FUTUR GROWTH
The industry is already well established and
optimism is strong as local demand is growing
as Bangladesh is experiences +5% yearly
growth in GDP

Only minor product adaptation and staff


training is needed in order to explore new
markets

Large amounts of seasonal fruits and


vegetables are not utilized today and are just
waiting for the processing industry to get
started

Demand in the fishing industry is outweighing


existing supply

Bangladesh has a very cost-efficient labor force


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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

IT WILL REQUIRE AN EFFORT TO GAIN


MARKET SHARES IN THE EU AND THE US

Investment capital and new technology


needs to be transferred from abroad

Training of local workers need to be in


focus

Production quality most be increased

A broader product range targeted the


main EU and US market will have to be
developed

Marketing skills to penetrate the EU and


US markets will have to be learned

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

AGENDA

Food sector overall

Fishing industry

Vegetable industry

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

BANGLADESHI FISHERY SECTOR IS A LARGE


AND IMPORTANT SECTOR
With 166,000 km2 of sea area and more
than 200 rivers with a total length of 22,155
km Bangladesh is endowed with abundant
water resources

White fish and shrimps are available more or


less in every district of the country making
fishing one of the most important industrial
sectors in Bangladesh

The sector contributes with ~5% to GDP and


accounts for 4.3% of all foreign exchange
earnings

1.2 mill people are engaged in the sector on


full-time and ~10 mill on part-time basis.
8% of the total population is directly or
indirectly engaged in the industry
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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

2.564 Mill MT FISH ARE PRODUCED YEARLY -


CLOSE TO 80% COMES FROM INLAND SOURCES

Marine Inland
fisheries fisheries

Trawl fishing Artisanal fishing Closed water Open water


34.159 MT 463.414 MT 1.060.000 MT 1.006.000 MT

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

MARINE FISHING ARE GROWING


AT 9% ANNUAL
Bangladeshi waters are rich in nutrient
creating favorable fishing conditions

Marine fishing includes industrial fishery


with large trawlers and artisanal fishery
with mechanized and non-mechanized
boats

In FY07-08 34,159 MT fish was produced


by trawl fishing and 463,414 by artisanal
fishing

Growth of marine fishing has been


moderate about 9% during the last five
years (trawl fishing 5% and artisanal
fishing 10%)

The main fish types caught in sea are


Illish, Bombay Duck, Pomfret, Jew fish and
Sea Cat fish

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

TRAWL FISHING IS DOMINATED BY


UNSUSTAINABLE BOTTOM-FISHING
Modern fishing trawlers were introduced in
the eighties and the fleet has grown rapidly
in the last 10 years

In 1997 there were only 14 white fish


trawlers in Bangladesh and 41 shrimp
trawlers. In 2009 the figures are 133 and 49

182 of the vessels have onboard fish


processing facilities

Out of the 182 trawlers and vessels, only 8 of


them are mid-water fishing vessels, the rest
are bottom-water fishing vessels being very
damaging to the environment

Government has not since 2005 given license


to new fishing vessels, but it is expected that
around 40 mid-water licenses will be given in
months to come

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

INLAND FISHERY IS ALSO GROWING AND


EVEN STRONGER THAN MARIN FISHERY

Inland fisheries has grown by


26% during the last five years
and in FY07-08 ~1.000 mill MT
fish was produced in both inland
open and closed-water

Out of the 2.066 mill MT produced


fish in FY07-08 only 0.135 mill MT
was shrimp and prawns

The main fish types caught in


inland water in FY07-08 were
carp, cat fish, snake head, live
fish and Illish

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

GROWTH IN WHITE FISH PRODUCTION


BUT ALSO OVERCAPACITY IN PROCESSING
Of the 2.563 mill MT produced fish in FY07-
08, 92% were white fish and 8% shrimps
and prawns

The production of white fish has increased


23% during the last five years

There are 145 fish processing plants with an


annual production capacity of 265,000 MT

Of the 145 plants 92 are in operation. 53


are out of operation, mainly due to lack of
raw materials and working capital. Of the 92
plants 54 process shrimps, while 10 of them
only white fish. The remaining do both.

68 of the plants have approval by the EU to


export to EU countries
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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

THE FISHING INDUSTRY IS FACED WITH A


NUMBER OF CHALLENGES
Persistent shortage of fish supply is a
major issue as local and international
demand is increasing even more then
supply

Need for new machinery, technology and


development of products and marketing
for the EU-market is obvious

Quality standard has to be improved and


regularly monitored

Lack of electricity and gas supply and


weak infrastructure are constraining
production

Shortage of working capital and the risk


of natural disasters are other challenges

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

BUT THE CHALLENGES ALSO OFFERS


OPPORTUNITIES
Processed fish supply is not large enough to
satisfy demand. Supply can be increased:
Technology to increase effectiveness in
inland and marine fishing (adapted
fishing gear, drift of machineries etc.).

Increased investments in hatcheries


and closed water productions (ponds
etc. )

Products could be adapted to high paying


European markets

Utilization of waste materials in existing


processing could be further developed (new
technology)

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

SUPPORT TO DANISH COMPANIES WISHING TO


ENTER THE BANGLADESH MARKET IS POSSIBLE
The Business to Business
programme supports Bangladeshi
and Danish companies seeking to
engage in long term strategic
partnerships

Support can be applied for in


three phases:
1. A Contact phase
2. A Pilot phase
3. A Project phase

Up to 90% of all costs can be


covered with a maximum of DKK 5
mill.

For more information please see:


http://www.ambdhaka.um.dk/en/menu/Develo
pmentIssues/Businesstobusiness%28B2B
22 %29Programme/
UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

If you would like to know more about the fishing industry in


Bangladesh and about your business opportunities please
contact the Royal Danish Embassy in Dhaka at morlyn@um.dk
(B2B-Coordinator, Morten Siem Lynge)

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

AGENDA

The food sector overall

The fishing industry

The fruit and vegetable


industry

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UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

Study to be done in late 2009

More information will follow

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